Stocks fall on Wall Street as US job losses continue to mount

Economically sensitive sectors have led stocks on Wall Street into their first decline in five days as mixed signals on jobs and service-sector activity weighed on investor sentiment and extended a worldwide slump in shares.

US employers cut more jobs than forecast and the S&P 500 Index traded at the most expensive in eight months.

Aetna, the third-largest US health insurer, dropped 5.3% on a reduced 2009 earnings outlook. Valero Energy tumbled 17% after forecasting a second-quarter loss and saying it will sell shares.

The Dow Jones Industrial Average, which rose in the previous four sessions, is down 101.39 points, or 1.2 %, at 8639.48, slipping below its year's high. The S&P 500 is off 1.7% at 928.57, hurt by declines in every sector. The weakest were energy, down 4.1%; basic materials down 4.2%; and industrials, off 2.3%.

Also weighing on energy companies, oil futures slipped $US2.91 to $US65.64 a barrel after data showing a rise in US stockpiles of crude. Oil's declined helped to push the Dow Jones-UBS Commodity Index down 2%.

Canadian stocks fell for a second day, led by energy and material producers, as a commodity rally that had pushed the main equity index to its best month since 1999 stalled.

Suncor Energy and EnCana fell more than 4%. Goldcorp, the world’s second-largest bullion producer, declined 3.9%.

The S&P/TSX Composite Index is down 239.22, or 2.3%, to 10,349.57.

European stocks slid the most in three weeks as investors speculated a three-month rally has outpaced expectations for earnings and economic growth.

Gross domestic product in Europe contracted 2.5% from the fourth quarter, matching an initial estimate and the most since the data were first compiled in 1995, the European Union’s statistics office in Luxembourg said today.

European household consumption shrank 0.5%, while exports slid 8.1% and imports declined 7.2%, all the most since the series started in 1995. Investment spending fell 4.2%, after a 4.3% contraction in the previous quarter that was also the sharpest since 1995.

Bouygues posted the biggest drop in six months after the French builder and mobile-phone operator said net income sank 29%.

The Dow Jones Stoxx 600 Index slipped 2% to 209.94, the steepest decline since May 13.

National benchmark indexes fell in all of the 18 western European markets except Ireland. The U.K.’s FTSE 100 lost 2.1% and

UK stocks declined the most in almost two weeks, led by mining and oil companies as base metals and crude prices declined.

Vedanta Resources, Xstrata and Anglo American tumbled more than 6% as copper retreated from a seven- month high. BG Group lost 2.9% amid concern Brazil may limit exploration of promising oil discoveries. Barclays dropped 5%, extending Tuesday’s sell off after Abu Dhabi investors sold part of their stake.

The FTSE 100 Index lost 2.1% to 4,383.42, the most since May 21..

Germany’s DAX Index fell 1.7% to 5054.53, trimming its rebound from this year’s lows to 38%.

Salzgitter slumped 5.7% after UBS cut its recommendation for Germany’s second-largest steelmaker. BMW and Daimler, the world’s biggest luxury-car makers, retreated on lower US car sales in May.

France’s CAC 40 Index lost 2%, to 3309.65, the biggest loss in almost two weeks.

Commodities: Oil, gold down

Crude oil fell the most in six weeks after a government report showed US supplies unexpectedly increased as fuel consumption plunged to a 10-year low.

Inventories climbed 2.9 million barrels to 366 million in the week ended May 29.

Crude oil for July delivery fell $US2.95, or 4.3%, to $US65.60 a barrel in New York. Futures dropped as much as $US3.60, or 5.3%, the biggest drop since April 20.

Gold fell the most in almost two months as a rebounding dollar curbed demand for the metal as an alternative investment. Silver also declined.

Gold futures for August delivery lost $US18.30, or 1.9%, to $US966.10 an ounce in New York, the steepest drop since April 6.

Currencies: Dollar up, pound down

The US dollar rose against the euro for the first time in five days on speculation an economic recovery will be too weak to sustain gains in higher-yielding assets such as stocks, encouraging demand for safety.

The greenback climbed against almost all of the most-traded currencies and the euro weakened as the contraction in the 16- nation economy deepened in the first quarter.

The pound dropped the most against the dollar in six weeks on bets a three-month rally in European stocks outpaced expectations for earnings and economic growth.

The dollar climbed 1.2% to $US1.4132 per euro and traded at ¥95.69. The euro fell 1.1% to ¥135.43.

The pound depreciated as much as 1.8% to $US1.6283, the biggest intraday drop since April 22.

The Canadian dollar tumbled from near the strongest level in eight months as oil fell for a second day as the US dollar rose.